EU-27 assessing the likely impact on food of a ‘no deal’ Brexit

The member states of the EU-27 have begun looking at the impact of losing access to the UK market for food, if there is a ‘no deal’ hard Brexit.

The UK is a net importer of food from the EU-27. Countries like Ireland and the Netherlands would be hardest hit by a Brexit deal that forced trading on the basis of World Trade Organisation tariffs.

Also hit would be Germany and France, meaning these countries have a big economic interest in making sure the UK leaves in March 2019 with a trade deal in place.

If this does not happen, the report says the loss of the UK market will be made up for by increased trade between EU-27 member states.

However, it says that in the big food producing countries, supply and demand realities will see consumers gain from lower prices.

An added complication is that Ireland is insisting it will block the Brexit negotiations moving to the next stage unless arrangements are agreed to maintain a free trade border between Northern Ireland and the Republic of Ireland.

This is a huge political issue, given that this will be a border between the EU and UK, after Brexit.

As the drive continues for a trade deal with the Mercosur countries of South America, including Brazil, the European Commission is facing continuing criticism from France and Ireland over concessions on beef.

At issue is the quantity of beef these countries can put into Europe at zero or reduced tariffs. There have been suggestions that this could be increased to close to 100,000 tonnes.

However, the Commission has defended its approach, with a report claiming that while trade deals are controversial in agriculture, agrifood is the sector that has gained most from these.

This is based on an analysis of 25 separate trade deals in place for varying lengths of time.

However, the Commission report relies heavily on percentage gains and ignores the reality that some sectors, for example beef in Mercosur, are sensitive and will inevitably suffer, even if the rest of agriculture gains.

In its latest short-term market forecast, the European Commission says cereal production will recover, but only slightly in 2017/2018.

The increase will, however, be modest at just 1.5%, which equates to around 300 million tonnes. The Commission says this is a good outcome, based on a rise in yields, since the area planted is forecast to be down by around 1%.

Production will remain 1.6% blow the five-year average.

The Commission is also reporting that 2017 will be one of the worst years for wine production.

It is blaming this on unusually cold and wet weather at crucial times, leading to a 14% fall in the grape harvest.